The political parties should have a minimum consensus on national issues in a bid to speed up economic development of the country, said Syed Ershad Ahmed, President of American Chamber of Commerce in Bangladesh while talking to this correspondent recently.

He expressed the view that politicians should reduce their differences of opinion on energy issue and work together to develop this sector protecting national interest.

He opined that the government should have a short-, mid- and long-term strategy to overcome the nagging power crisis that is seriously hampering industrial production and civic life.

He suggested that a committee comprising professionals should be set up that will send recommendations to the parliament standing committee on energy and power.

The treasury and opposition benches would discuss the matter in detail in the national parliament and should recommend necessary steps to develop the energy sector. The economic development of the country is highly linked with the expansion and development of power sector, he said.

On deep sea port, he said that Bangladesh economy would be immensely benefited by becoming a regional hub of shipping business in the region.

Laying stress on the parliamentary democracy in the country, Ershad opined that a vibrant parliament should be the focal point of discussing issues related to the national interest.

Criticizing the culture of boycotting Parliament by MPs on mere excuses, he clearly stated that the people of Bangladesh have elected them to discuss national issues relating to education, health, social security, job creation, national security, environment, etc. in the assembly.

Laying stress on water transportation, he said the government should mull over setting up whole markets in Sadarghat, Waiseghat, Gabtali and Turag by protecting the rivers flowing round the Dhaka city.

He demanded that the government should dredge existing rivers and canals that will speed up and expand transportation of goods through waterways. The price of consumer goods will come down, provided goods are carried through waterways.

He expressed the view that industries set up in the Dhaka and outside the capital should have effluent treatment plants (ETPs) to protect water bodies as well as environment. Expressing concern on pollution of rivers, he said civic life is in great danger and demanded exemplary punishments to culprits polluting water bodies and grabbing land to develop housing plots.

Opposing recruitment of diplomats on political consideration, he said this is era of the economic diplomacy and suggested that career, seasoned and skilled diplomats should be posted abroad to serve the nation.

He suggested a diplomat should be groomed up with culture and language with the country concerned where he or she going to be posted. For example, if a diplomat is posed to Paris, he or she should have minimum orientation about French language and culture. Lamenting poor services provided by Bangladeshi diplomats abroad, Ershad said embassies concerned should extend necessary support to Bangladeshi workers. Citing examples of ASESN diplomats and even western diplomats in Dhaka, he said the traditional mindset of the Bangladesh diplomats should be changed with a view to serving national interest of the Bangladesh as well as its workers.

Nearly 80 lakh Bangladeshis are working in different parts of the world and keeping local economy vibrant. Last year expatriate Bangladeshis sent over nine billion dollars to the country. On keeping an option of whitening black money in the forth-coming budget, Ershad opined the government can consider this option in the light of the global recession. But he suggested that this money should be invested in productive sectors, such as industries, and not in non-productive sectors, like real estates business or in purchasing cars. That will encourage corruption, and the corrupt people will take the advantage, the way they did in the past.

This democratically elected new government came into power with the people’s mandate. They promised that they would ensure good governance and continue the fight against corruption. He praised the government plan to introduce daylight saving time by advancing the clock by one hour from June to save electricity during the evening hours. He also said that the government might consider introducing Saturday-Sunday as weekends, as this could bring Bangladesh in line with the global business community as well as this would meet the growing demand for it, by the business community.

He said that countries like Malaysia, Indonesia, Pakistan, and others where the Muslims are the majority of the population keep Sunday as the weekend holiday. Many countries of the world, including some Asian states, as well as some major corporations have now resorted to austerity measures to help overcome economic meltdown. “We hope that the Bangladesh government would also seriously consider austerity measures towards spending the public money”, Ahmed said. The government has to face bigger challenges in preparing the budget against the backdrop of global recession. The revenue collection may drop in the coming year. Export earnings as well as remittance flow are likely to witness slower growth.

On nagging traffic congestion in the city, he said the government can mull over handing over Bangladesh Road Transport Authority (BRTA) to the private sector to efficiently handle the traffic management in the city. “Today play-grounds are being occupied by interest groups. Rivers are being grabbed, thus putting pressure on the environment. Building codes are not being followed properly, which leads to worsening traffic situation. There are numerous examples of clear violation of building codes. After gaining permission, parking lots are being rented out for other purposes than parking,” he said.

The government must not waste anymore time on the coal extraction issue. It should ask the foreign company concerned to start extracting coal from Phulbari and, in the meanwhile, start making arrangements for setting up coal-based power plants. Many private entrepreneurs will be interested in setting up the same, experts said.

The country at the moment has only one coal-fired power plant at Barapukuria. The plant has been set up by a company from the People’s Republic of China, the world’s largest producer of coal-based power.

Meanwhile, energy adviser, Tawfiq-e-Elahi Chowdhury said that prime minister, Sheikh Hasina, has directed to finalize the coal policy, as the country needs alternative energy sources to produce electricity. The energy ministry will soon hold an open discussion on the draft coal policy with different stakeholders for finalizing the policy on a priority basis.

When asked why another meeting was needed with stakeholders when controversy was raging over the coal policy for the last three years, Tawfiq said, ‘Every government has its own policy and philosophy. Of course, we will consider the investment issues, local people’s concern and electricity generation while finalizing the coal policy.

The previous BNP-led government that first prepared a draft of the coal policy and then the caretaker government held half a dozen open meetings with stakeholders but could not finalize the draft because of controversy surrounding the mining method and fixation of royalty.

The only feasible option left before the country is the setting up of coal-based power plants. Bangladesh has substantial deposit of quality coal. It is now extracting coal from one coalmine at Barapukuria through the traditional method. The extraction of coal from a large coalmine at Phulbari has remained stalled due to controversy over the method of coal extraction. In the absence of an official coal policy, experts as well as politicians are now engaged in a heated debate over the methods of coal extraction-open-pit or traditional tunnel systems. The open-pit extraction ensures nearly full exploitation of the coal reserve but not without a cost. It displaces population settlements, destroys arable land and causes other environmental degradation.

It seems that for fear of political fallouts, the government has been dragging its feet on the issue of coal extraction from the Phulbari coalmine. Accoring to expetts, the time is running out fast. The government has to make a firm decision on the Phulbari coal and start extracting the same as early as possible. This is all the more necessary not to earn foreign currency by exporting coal but to start using the same for generating power.

Meanwhile, speakers at a roundtable at CIRDAP auditorium recently suggested the government to finalize the coal policy immediately through political consensus for setting up of coal-based power plants to address the power crisis. “The government should go for coal-fired power plant even if based on imported coal,” they said Chairman of Parliamentary Standing Committee on Power and Energy and Mineral Resources Ministry Maj Gen (retd) Shubid Ali Bhuiyan said that the government should go for coal-based power plant through a political understanding for finalizing coal policy. “If necessary the government should import coal for this purpose,” he added.

State Minister for Power, Energy and Mineral Resources Shamsul Haque Tuku called upon the Oil, Gas and Bandar Protection Committee to refrain from their movement in the interest of the country. The sate minister urged the committee not to obstruct the government’s activities with the support of outsiders.

Former State Minister for Power and Energy Iqbal Hasan Mahmood Tuku said that the present electricity crisis was created 20 years ago when the World Bank and the Asian Development Bank (ADB) withdrew their financial support in the name of promotion of the power sector through the private entrepreneurs. “The government must come out from the World Bank prescriptions to ensure sustainable development in the power sector,” he said. He also observed that the lengthy bureaucratic process was the main hindrance to improve the power sector.

Former State Minister for Energy AKM Mosharraf Hossain said the earlier the alliance government had made a move to go for offshore gas block bidding. “We could not get success because of non-cooperation of India and Myanmar at that time,” he claimed. “We may have many options for power generation, but coal should be the best option in the present perspective as we are not in a position to go for offshore exploration of gas immediately,” Dr Ijaz Hossain of BUET told at his keynote paper. He said that the country with its 2.0 billion tons of coal reserve can generate 10,000 MW electricity for next 50 years. The Energy and Power magazine organised the roundtable, which was moderated by its editor Mollah Amzad.

Mullah Amzad Hossain, editor, Energy & Power, a Dhaka-based fortnightly magazine explains to Robab Rosan why we wont get much relief from load shedding in the next few years

We have been virtually living under a state of power shortage for almost decades now, especially during summer season. While subsequent governments have promised to deal with the issue and blame each other, the situation seems to deteriorate by the day. What has really happened through these years?I think people are aware of the present situation in the power sector. I have monitored the flow of electricity from twelve hours from 10:00am to 10:00pm on April 15 and I have seen that electricity is not coming back after one hour, as per the schedule of load shedding. It is taking more time to return but staying on for less time. The situation is gradually getting worse.

I think the demand for electricity in the country in peak hours is no less than 7000 MW and the government is saying that electricity is being produced from three thousand to thirty seven hundred MW. And there is also a fifteen percent system loss as well. If we take into account uninterrupted supply of electricity for privileged people and areas, we see that the share of electricity amongst the common people is minimal.

Corruption has become the most popular victim in the country. For me, inefficiency is more dangerous than corruption.

We saw infrastructural development during the rule of HM Ershad, however, many irregularities and corruption were reported during that time. Later the BNP government continued the projects and took only a single project of establishing an electricity production centre in Siddirganj.

Next, the Awami League government finalised the Independent Power Producer policy (IPP), drafted by the previous BNP government.

The AL government successfully increased production of electricity from seventeen hundred to eighteen hundred MW to nearly four thousand MG according to the policy. We got 1300 hundred MW of electricity from the IPP.

Unfortunately, the next BNP government did not continue the projects taken by their predecessor. The government said that IPP was a curse for the nation and the then finance minister Saifur Rahman said they would not take even suppliers’ credit in the power sector. They later realised that they should start the IPP facility and suppliers’ credit again. But this time they wasted two years.

The BNP government started a centre of one hundred MW capacity at Tongi during their last tenure. They also began the process for a 240 MW production centre in Siddirganj and a centre in Sylhet, that started production during the last caretaker government.

Right now, we have five and a half thousand MW installed capacity. But many of the machineries are old and some of them remain closed for repair. On the other hand, the centres do not get uninterrupted gas supply. For these reasons, the production centres cannot produce according to their capacity.

The governments blame each other. I say that there was virtually no development not only in the power sector but also in the energy sector in the last seven years.

During the tenure of the previous government we saw violent crises regarding the shortage of power in Kansat and Demra. And yet, we now hear that not a single megawatt of power was increased in the last five years. Is this true and how is it possible?

The crisis of electricity will never be solved because in our country, gas is the main source of producing electricity. Eighty seven percent of electricity in our country is being produced by gas. We do not have enough reserve of gas. The government has yet to decide on whether to extract coal. They are delaying more and more. If we extracted coal, it could be used in generating electricity. There is no plan, I think, to generate electricity by purchased oil.

The government has planned to produce five thousand MW of electricity by five years. I agree with the government that it might be possible in five years but not in three years. The government has to involve local and foreign companies to explore gas immediately and urgently and they should also extract coal. Otherwise it might not be possible.

The finance minister has said that we cannot do anything about load shedding in the next three years. Is there really no way out?

Yes, the finance minister has said it correctly – we cannot do anything about load shedding in the next three years because it is a lengthy process. I have said earlier that the government can increase production in five years if they take effective initiatives right now. If they do not take initiatives they will not be able to produce even in five years.

The government can provide social tariffs for at least sixty percent of people, who are in the marginal line of poverty. They can give twenty percent subsidy to the lower middle class people. But those who are capable of paying must pay the original price. The government can also establish a special grid for uninterrupted electricity at the higher price.

In a recent report, we have heard that the government is thinking of purchasing electricity from India. What are your views on that?

I think, this region (SAARC) is the only region where we have no real cooperation in the energy sector. Due to lack of faith among the two countries, Bangladesh and India, and a lack of far sight in our politicians, we could not establish a multinational cooperation in this region. We can import electricity from India in the short run or mid run. We can also import electricity from Nepal but the decision should be taken immediately.

We currently, apparently have the capacity to produce 600MW of extra power and yet we don’t have the gas to do it. Meanwhile, our gas resources lay as it was because we have not been able to resolve our issues regarding the extraction of gas. How can we increase our gas supply?

If the question of gas supply comes we will see many irregularities in this sector. We are unfortunate because our governments do not solve the problem. They allow the problem to grow into a crisis and then they go for the remedy. But by this time we waste a lot of time and money. We are gradually losing our reserve but not exploring new gas fields. We are neither allowing foreign companies nor the local ones to work in this sector.

We have to extract coal for generating electricity because about fifty percent of electricity is produced across the world from coal. Denmark, which has a contribution of 42 percent in renewable energy, produces 48 percent of its electricity from coal. Our neighbouring country India produces about sixty percent of its electricity from coal and China produces around seventy percent of its electricity from the same resource. The government must ensure better rehabilitation of people and minimise environmental hazard for extraction of coal.

Using the policy of Production Sharing Contract (PCS), the government should immediately take initiatives to explore gas in the Bay of Bengal, otherwise we will not be able to increase our production.

There is inefficiency in the government sector. At the other end we have increasing demand, sometimes artificially created by MP’s and their electoral promises. How do we get out of all this?

Forty percent of total budget in the power sector should be kept for generation, forty percent for transmission and the rest twenty percent for distribution. This was not done properly.

To earn cheap popularity, the government says that they will set up production houses at their own cost. We virtually need nearly five million USD to set up a 450 MW power plant. This is not possible for the Bangladesh government to do single-handedly. Our share market is also not booming that the government will collect money from the market.

If the question about the extension of electricity in rural areas comes I will ask the government whether they want to keep our rural people in darkness. The rural people have the right to get electricity. The government knows that ten percent demand will increase every year.

To extend electricity is not a fault. It is a fault not to produce electricity. People can demand electricity from their representatives. The government is developing roads but not giving electricity. You cannot expect development without electricity.

What are your views on alternate sources of power for households and how can we effectively increase awareness among people to stop wasting power?

The government is going to take an appreciating initiative to replace all the incandescent bulbs with Compact Florescent Bulbs (CFBs) by two years. The World Bank will provide the bulbs free and the German organisation GTZ will provide technical support. The government has planned to replace one and half crore bulbs by February next and one crore more by the end of the year. It will save eighty percent of bills and save eight hundred MW electricity.

The government should also ensure that the generators, refrigerators and ACs and other appliances are energy efficient. The government can also encourage the factories, particularly the steel mills, to run at night. On the other hand, the government can close markets by five o’clock five days in a week and can keep them open till 11:00 at night on the remaining two days. Shoppers will get habituated to this system in time.

ET Report
Local people were involved in violent protest against Phulbari coal mining initiative. It appears contradictory since local people should welcome such a project provided it is designed appropriately taking into consideration of their concerns and expectations. Local people should be convinced that their life and livelihood would be significantly improved while contributing to national development.

Dr Tawfiq-e-Elahi Chowhury, Bir Bikram, Advisor on Energy to the Prime Minister in an recent interview with Energy and Power magazine editor Mollah Amzad Hossain. expressed the views. He further said a stalemate situation has been created in the formulation of coal policy and exploration of coal due to lack of faith and confidence of the people. The government has definite programs to address the energy sector issues in the greater interest of the people. Some rental plants and small power plants which were initiated during alliance government and caretaker government are at various stage of installation.

Dr Elahi focused on various issues related to energy sector in the interview. Excerpts below:

EP: Power generation and supply is well below demand. People are in great sufferings. Even gas supply for power generation is well below demand. Why alternate fuel could not be made available? What led to this situation you think?

TEC: Indecision of previous governments especially of the 4-party government created this situation. No initiative was taken for about 7 years to explore new gas resource. No new major gas field was discovered after the large Bibiyana Gas field during previous term of Awami League Government. Neither IOCs nor could BAPEX has been steered to explore new gas resource. There is no other alternative to expand or increase gas reserve without new discovery. Alliance government also failed to proceed with the PSCs signed in second round bidding during Awami League government.

If we think of coal – major alternative of gas, underground coal mining on supplier’s credit was taken during the BNP rule. It had two flaws of which one impacted on the other. Local population was not consulted for taking them into confidence for a project like coal mining. Consequently, people were not made aware of the inevitable mine subsidence and the impacts although the operators of the mine were well aware of it. Another development you must have observed in Phulbari coal mining initiative. Local people were involved in violent protests against the mining initiative leading to loss of lives. It appears contradictory since local people should welcome such a project provided it is designed appropriately taking into consideration their concerns and expectations For such projects to be successful, local people should be convinced that their life and livelihood would be significantly improved while contributing to national development. No major project can be implemented anywhere ignoring the local people.

This is a major failure of the government. The 4-party government as well as the Care Taker Government played hide and seek with local population regarding Barapukuria and Phulbari projects. We must remember taking local people into confidence is the responsibility of the government. In fact, a stalemate situation has been created in the formulation of coal policy and exploration of coal due to lack of faith and confidence of the people in the past governments.

EP: Energy Sector of Bangladesh is now in serious crisis. What are your plans to confront it? How long you it will take to get out of it?

TEC: It is only three months this government has come to power. Prime Minister has kept this portfolio given the fact that this sector requires the attention of the highest level. We have to start with what we inherited from previous regime. On stock taking, what we observed that over the last 7 years nothing of note has been done for the development of energy sector. The present situation is the consequence of the inaction over the years. Our government has definite programs to address the energy sector issues in the greater interest of the people.

The first priority is what we can achieve by 2011.Then comes what we have in our vision 2021. We are endeavoring to plan actions for short, medium and long term to achieve these goals. Planning and implementation of short-term actions will proceed simultaneously. We have initiated a two-pronged strategy. We have to bring the under-implementation small plants into operation as soon as possible and simultaneously, do everything to ensure steady and uninterrupted operation of existing plants. We are also acting for ensuring smooth fuel supply – gas, for these plants. In our current assessment gas supply constraints have been identified as the single most important impediment. There are limitations in gas production and also restrictions in gas transmission.

On a priority basis, we have already arranged to evacuate about 50-60MMCFD stranded gas from Jalalabad Gas field through constructing a spur line. This can facilitate generation of additional 200 MW of electricity. GTCL has been advised to simulate its Gas Transmission Grid to devise ways of optimizing gas supply. This may facilitate to improve gas supply to Shambhuganj Plant at Mymensingh and Siddhirganj. But everyone should realize there is no instant cure for such long ailment.

The 4-party government in 5 years did only plan and implement the lone 80MW Tongi plant. Other power plants which commenced generation during that time were initiated during previous term of Awami League Government. Some other rental plants and small power plants which were initiated during alliance government and caretaker government are at various stage of installation. These are not enough to confront the crisis. If the alliance government had taken appropriate and timely decisions to set up some large power plants the present crisis could have been averted.

Moreover, the 4-party government cancelled the initiative to set up a 450 MW power plant at Sirajganj at the final stage. WB agreed to finance the project. The promised fund was withdrawn following government’s decision to scrap the project. Responsible persons of the 4-party government should be made accountable for such detrimental action.

We have initiated power factor improvement to improve quality of power supply. This will make 10% improvement of supply using the same amount of power and ensure savings of around 300 MW power everyday. You are aware that many of our power plants have already outlived their effective economic life. These have turned into fuel inefficient plants. Actions have been taken to upgrade such old plants. We need to either rehabilitate or replace these with efficient plants. With these remedial measures we will get more power from existing plants. But it will take quite time. We are planning to do these in phases during winter when the demand for power is relatively low.

EP: We are lagging way behind PSMP. According to it power demand for 2009 was projected as 7200 MW and generation capacity should be 10% more than that. But during this period power generation never goes beyond 4200 MW. Will it be at all possible to come out of it?

TEC: I have indicated earlier that power generation can be increased to some extent if gas for power can be enhanced. But there is no magic solution which will overcome the present crisis. But demand side management, energy efficiency and conservation can help ameliorate the adverse impacts of power scarcity. We are taking some urgent actions in these regard.

The Prime Minister instructed us to do the needful so that the farmers have the first right to electricity during the Boro season. Under her guidance, we managed the load in such a way as to ensure uninterrupted power supply for agriculture for irrigation. This might have resulted in some extra burden on the urban population, but together we have managed the challenge. Promoting energy efficiency is another measure. For example, a recent survey has evidenced that about 300 MW power can be saved if traditional bulbs can be replaced with power efficient CFL bulbs in 10 major towns of Bangladesh. That’s as good as setting up power plants of 300 MW!

CFL is use in many countries now. 4.5 million traditional bulbs were replaced with CFL bulbs in one day in Britain. We have taken up a project with the assistance of World Bank and GTZ which will culminate in replacement of 15million (I crore and 50 lakhs) traditional bulbs with CFL throughout selected urban centers and rural areas in Bangladesh early next year. Besides planning logistics and standardization of CFL, we shall seek public support for the initiative including the local government organizations. I am sure media would not be in wanting to lend its mite.

Emphasizing energy efficiency is another strategy to deal with such power crisis. You may be aware that many of our industries have small gas fired boilers. We have gas shortage and these inefficient boilers are wasting our valuable resources. We are considering converting these to liquid fuel and reviewing the possibility of formulating a policy to covert these within a time frame. Energy audit is also under consideration. This will ensure efficient use of energy at all stages. All boilers, chillers and all appliances will be standardized under legal framework with a view to ensuring energy efficiency Capacity of BSTI will be enhanced to deal effectively with these emerging issues.

EP: Awami League Election manifesto includes addition of generation of 1500 MW power by 2011 and 3500 MW by 2013. But existing power plants are not getting the required gas supply now. Considering this situation how the 5000 MW capacity power plants in the pipeline will get fuel supply? Do you have plans to import coal or LNG?

TEC: You are aware that the Prime minister herself is in charge of this Ministry. Awami League election manifesto has some specific milestones. PM came to ministry immediately after the assumption of office and gave specific guidelines for implementing the election manfesto. Among others, the exploration and development of gas resources came up for discussion. A two-pronged strategy will be implemented: accelerating the programs undertaken by BAPEX and involving IOCs through a competitive process that serves the best interest of Bangladesh. You are aware that ECNEC under the chairmanship of the Prime Minister has approved over TK 100 crore for BAPEX to purchase a modern drilling rig and other drilling equipments. Alongside, specific actions would be put in pace the enhance and strengthen the capacity of BAPEX. Another exploration program at Mobarakpur has been recently approved. BAPEX will focus in areas which have lesser risks but higher prospects while IOCs will be encouraged to invest in areas which have greater exploration risks.

You yourself commented that single-fuel dependent energy generation is not sensible. In the same vein we have stressed upon fuel diversification. From that perspective coal is our second most important energy source. We are trying to design an appropriate model taking into consideration the experiences, the mistakes or lack of attention on important mining issues in case of Barapukuria. This will ensure coal exploration that meshes the aspiration of local community and in particular, those that are adversely affected, with the national goal of energy production and security. The Prime Minister has instructed all concerned to mitigate the problems of the affected community of Barapukuria coal mine while ensuring its uninterrupted operation.

While the previous governments had put the problems of local community under the carpet, particularly the land subsidence, the Prime Minister not only instructed her Ministry and its implementing agencies to address the emerging issues but also took out time from her busy schedule to listen to the representatives of Barapukria and gave instant directives. We are acting accordingly. EMRD has formed a committee to investigate all relevant issues and suggest recommendations. We are endeavoring to reach a consensus with the local communities and carry forward the mining that best serves all competing interests.
The mining model evolving from lessons learnt from Barapukuria will be the basis for further customization, fitting specific conditions of different coal mines. In this process we shall consult mining, environmental and energy experts including the non-resident Bangladeshis. We expect that in the next 5-7 years, coal would emerge as one of the major primary fuels for power generation in Bangladesh.

We are planning to go for dual fuel option for the power plants now under planning. If gas is not available these will run with liquid fuel. Please bear in mind the government will not limit its power generation vision on gas & coal only. We are actively considering nuclear power generation although it is unlikely to come on stream within the 5 year-term of the present government. The PM is very keen on exploiting opportunities for renewable energy. Alongside other measures, we are actively considering the applications from renewable source of energy. We are exploring the possibility of solar power generation in commercial way apart from limited use as solar home system. Especially, the possibility of running irrigation pumps with solar power is being actively explored. If we succeed, this will drastically lower power requirement for irrigation.

It was a common belief that Bangladesh is not ideal for wind power generation. Now technology has significantly advanced. Modern wind turbines do not need strong wind flow. We will work to explore the possibility of introducing this technology. Beyond this we are thinking about supporting bio gas plants and also exploring possibility of energy from waste. The challenges for harnessing these diverse sources of energy on a large scale are daunting but we shall keep pursuing and I am hopeful of some success at the end.
Few large IPPs are on the drawing board and donor agencies are prepared to stand by us in the competitive bidding process. But the recent international financial melt down has made their prospects for financing uncertain. While we shall go for the bidding, alternative modalities for implementation would also be developed, should we face limited response.

EP: Our Gas production capacity is 1850 MMCFD against present demand of 2100 MMCFD. Another 60 MMCFD additional production is expected from the end of March. Apart from this is there any possibility of increasing gas production by 2011 and if so from where? What will be the gas scenario in 2013? If we fail to discover new gas reserve we will have no alternative but to rely on coal. Otherwise we will have to import liquid fuel or LNG. How do you view this situation?

TEC: Petrobangla is working on a gas production augmentation program. The goal is to maximize production from existing fields without jeopardizing the structures. This appraisal-cum-development program should yield some positive results. The exploration programs of BAPEX would also put on a fast track. We shall also nudge the IOCs to bring forward some of their exploration programs. All these would lead to increase in gas supply although it is difficult to speculate the number. You are right in suggesting that coal would also have to be developed simultaneously which I have elaborated before. As a contingency measure, we should not exclude the possibility of LNG import in the intervening period.

EP: Cairn will not further explore at Magnama and Hatiya if Petrobangla do not agree for higher price than agreed in PSC or allow them to sell to third parties directly in local market. In this scenario it has been recommended to approve it. There are complaints that it is a major departure of PSC provision. What is your opinion?

TEC: We are examining the proposal both in the context of the terms of the PSC, incentives for the contractor and the greater interests of Bangladesh. While exploration for new resources are critical now given the shortage we are in, we have to be equally aware of the longer term energy supply and security of the country. A balance has to be struck.

EP: French Company Total has relinquished block 16 & 17. It is told that their decision is influenced by the gas structures they found are not economically viable to explore. Cairn has also relinquished block 5 &10. Only Chevron has expressed intention to carry on exploration efforts in block 7. So in the next 5 years we can not expect major discovery by IOCs. Do you think it will be possible for BAPEX alone to meet our demand?

TEC: There is no last word in exploration. So do not make conclusive judgment if blocks are relinquished by contractors. We are looking into different options in this regard. BAPEX would be put into fast forward mode to which I have already referred to already. Alongside, we shall examine joint venture with BAPEX and also involvement of IOCs in the future. New policy guidelines would be put in place if conditions so require.

EP: Are you going to approve the Petrobangla proposals to award some PSC s to IOCs to start exploration in offshore? Or you will go for fresh bidding?

TEC: The last Caretaker government took the initiative for awarding exploration contracts to some IOCs for offshore blocks. We are examining the papers and after due diligence, firm up our position. Our government is only 3-month old and you should allow some time for arriving at decisions on such important national issues.

EP: Demarcation of Maritime Boundary in offshore exploration is a sensitive issue. This can create dispute with neighbors. How you are approaching this?

TEC: An expert committee is working on it. We will finalize maritime boundary in the shortest possible time. Ministry of Foreign Affairs is actually handling this matter.

EP: Other than Barapukuria another proposal for coal mining at Phulbari is waiting government approval. Asia Energy is waiting for 3 years after submitting proposal. It has been told since last Alliance Government that decision will be taken in accordance with coal policy. Care Taker Govern echoed the same. But coal policy is not yet approved. Which route you are following on this? Will you also work on coal policy or will start coal mining?

TEC: You should have asked the past governments why even after years they could not finalize a coal policy. Ours is a democratically elected government and we have mentioned our overall stance in the election manifesto. The government has already started evaluating the legacy of past regimes. We shall finalize the policy framework in consultation of all stakeholders. There are of course detractors. But a people’s government as ours is, we shall decide in the best interest of the country. While earlier governments dealt with the Barapukuria mine without taking the local communities into confidence, the Prime Minister took time out to talk directly with them. This amply demonstrates the overall strategy of the government.

EP: Will you to take fresh initiative to implement Tri -Nation Gas Pipeline from Myanmar? Is there any plan to import power from Nepal and Bhutan? If so, when?

TEC: The Prime Minster has on occasions emphasized the benefits of regional cooperation, particularly in the energy sector. Such initiatives can be bilateral or multilateral. We shall initiate discussions with our neighbors soon. Again, in the election manifesto this has been stated clearly.

EP: Some estimates evidence that about 20billion dollar investment is required in the next 5 years for Bangladesh Energy sector. Where from this will come? What are Government plans? How much of this will come from donors, how much from FDI and how much Government will invest?

TEC: Large investments are required, I agree. But I cannot put an exact number yet. One cannot deny that a significant part would have to come as FDI and from multilateral sources. World Bank and ADB have not only agreed to take part in financing these investment programs but also help raise funds from domestic and international sources. Although the current melt down in the international financial markets had cast some doubt about such prospects, the resolve in the recent G20 meeting and in particular, the decision to fund trade and investment, would soon release export financing from the developed countries to facilitate FDI flows in Bangladesh.

You may recall that during the last term of Prime Minster Sheikh Hasina, Bangladesh was able to attract large FDI in the energy sector along with some IPPs with one of the lowest power tariffs. Under her leadership, this time around, we shall do even better.

ET Report
The government is determined to set up coal-fired power plants to meet power demands and will wait no more for formulation of a national coal policy.

Finance Minister AMA Muhith said power generated from on-stream together with projects in the pipeline would not be enough to meet demand.

“So, we are mulling over new coal-fired power projects whether coal policy is formulated or not.” Industries minister Dilip Barua said investors were not coming forward due to many obstacles-power and gas and water scarcity, weak infrastructure, high interest rates, and complex tax and investment regulations, among others.

There was no alternative to removing these hindrances for domestic industries to flourish, he said. The ministers were delivering speeches at a seminar.

Staff Correspondent
The Awami League-led alliance government has decided to hold an open discussion on the draft coal policy with different stakeholders for finalising the policy on a priority basis. ‘The prime minister, Sheikh Hasina, has directed us to finalise the coal policy as we need alternative energy sources to produce electricity. We will soon hold an open discussion with different stakeholders to finalise it on an urgent basis,’ the prime minister’s adviser Tawfiq-e-Elahi Chowdhury told reporters after Hasina held a meeting with power and energy officials on Thursday.

The previous BNP-led government that first prepared a draft of the coal policy and then the interim government held half a dozen open meetings with stakeholders but could not finalise the draft because of controversy surrounding the mining method and fixation of royalty. When asked why another meeting was needed with stakeholders when controversy was raging over the coal policy for the last three years, Tawfiq said, ‘Every government has its own policy and philosophy. Of course, we will consider the investment issues, local people’s concern and electricity generation while finalising the coal policy.’

Hasina, who is also in charge of the power and energy ministry, held her second meeting, which lasted three hours and a half, at the ministry to discuss about the current power situation and what steps could be taken to improve it. The prime minister stressed the need for increasing gas and coal production for overcoming the power crisis. Sources present at the meeting said that Hasina had asked power officials why there were power outages 10-12 times a day. Power officials said that power outages more frequent in some areas because of technical faults. She dismissed power officials’ claims that there was only 15 per cent system loss in the power sector. Power officials said that the electricity supply situation in the capital would worsen after May because of rise in the demand and sought the prime minister’s directive in shutting down steel and re-rolling mills which consumed huge amount of electricity during evening peak hours.

Hasina asked the authorities to go ahead with the plan. She also asked them to launch a campaign for reducing use of air-coolers during peak hours. She asked officials to take steps so that the power projects that were in the pipeline – under construction, under tender process or planning – could be implemented as soon as possible. Tawfiq said that the capacity of the power plants in the pipeline would be around 3,000MW. ‘The prime minister has directed the authorities to go for dual-fuel option in installing the new power plants like the 450MW Sirajganj independent power plant,’ he said. Hasina also asked the authorities to start negotiations with the countries that had installed power plants like Ghorashal, Ashuganj and Khulna, to replace these old and inefficient plants with new plants. She asked the power officials to explore whether smaller hydropower plants could be installed in rivers and haors across the country and in water streams in Sylhet and Chittagong.

The prime minister also directed the authorities to expand solar energy projects in urban areas and to explore whether irrigation pumps could be run by electricity generated from solar panels. She also directed officials to explore whether electricity could be imported from India, Nepal, Bhutan and Myanmar under regional cooperation. For exploring new gas, Hasina asked the gas authorities to engage a contractor to conduct 2D and 3D survey at the onshore gas fields of Bangladesh Petroleum Exploration and Production Company as Bapex would remain busy in the next three years with gas exploration.

Hasina also directed energy officials to discuss with the attorney general the issue of taking legal steps to have a High Court injunction on signing production sharing contract for onshore gas fields withdrawn. Tawfiq said that they would take to the cabinet meeting a proposal for introduction of daylight saving system by advancing the clock by one hour to save power and gas during evening hours.

Sharier Khan
The country is walking the path of a perennial gas crisis where even the best possible situation of striking gas in the off-shore blocks will not give it a respite till 2020. This means unless the government takes major policy decisions like emphasising coal or nuclear power production within a short time, the already unbearable power load shedding that is hitting the economy and lifestyle very hard will go beyond any solution. Most of the country’s power plants run on gas.

The gas situation is so bleak that Petrobangla has been declining confirmation of gas supply to a number of upcoming large power projects. In a paper submitted to the prime minister, Petrobangla even recommended discouraging use of gas for power generation as it can be generated using alternative resources like coal. Power Development Board (PDB) sources say while Petrobangla okayed gas supply to Bibiyana 450 megawatt power project, it cannot confirm gas supply to the much older 450 MW Sirajganj power project till 2012.

For now it can only confirm gas supply to 150 MW Sylhet, 150 MW Bhola and two 150 MW Siddhirganj power projects. Petrobangla flatly refused to supply gas to Phase- 3 Meghnaghat 450 MW project, 150 MW Sikalbaha, 240 MW Dhaka North and 150 MW Khulna power projects. And it can conditionally supply gas to the dual-fuel 450 MW Bheramara project, 360 MW Haripur, dual-fuel 210 MW Khulna, 150 MW Chandpur and 150 MW Sirajganj projets. The condition is that gas may be available tor these schemes after 2012.

Lack of gas supply to the power plants is already forcing the PDB to refrain from generation of around 600-700 MW power. This is adding to power load shedding because of inadequate power plants in the country. Planning of power project has been revolving round availability of gas since the sixties. Till now the focus remains confined to gas-based power projects which generate around 90 percent of the country’s power.

PETROBANGLA’S PROJECTIONS
As per Petrobangla’s projection number-1, with the current activities involving gas exploration and production, gas shortfall will hit 142 million cubic feet a day (mmcfd) in 2011, 341 mmcfd in 2014, 838 mmcfd in 2016 and 1,714 mmcfd in 2019-20.

The demand for gas is 2,018 mmcfd at present and it will rise to 4,567 mmcfd in 2019-20 at the present trend of consumption growth, Petrobangla sources said. But the country is already experiencing more than 200 mmcfd gas supply shortfall, and the Petrobangla projection did not include this. It means the actual situation would be even worse.

Gas production in 2008-09 has been shown to be 2,042 mmcfd against the demand for 2,014 mmcfd. But in reality, the country is producing around 1,800 mmcfd gas from 17 gas fields–half of it by the international oil companies. Of this gas, power sector–including industrial captive power generators– is consuming 900 mmcfd, fertiliser factories 290 mmcfd and 580 to 600 mmcfd are being consumed by industrial, commercial and domestic and CNG users, and tea estates. In addition, the gas fields are producing 6,700 barrels of condensate.

In scenario-2, where international oil companies would discover new gas fields under production sharing contracts (PSCs) signed through the 1998 second round block bidding, the situation would be slightly better in 2011 as it offers 58 mmcfd gas supply surplus. But by 2014-15, this surplus turns into a deficit of 112 mmcfd gas. The deficit rises to 666 mmcfd in 2017 and 1,314 mmcfd in 2019-20. In scenario-3, where oil companies having off-shore block bidding contracts may strike gas, the situation is even better. But even then, the supply crunch starts in 2017 with 166 mmcfd deficit, rapidly rising to 814 mmcfd in 2019-20.

PETROBANGLA’S RECOMMENDATIONS
In a brief to Prime Minister Sheikh Hasina, Petrobangla pinpointed various issues of the country’s oil and gas sector, and said as per the Gas Sector Master Plan 2006, gas demand may be met till 2019 using the existing gas reserves and probable and possible reserves.

“But if we fail to find the probable and possible gas reserves, the crisis would emerge much before that time limit. In such a situation, it has become very urgent to expedite onshore and offshore oil and gas exploration,” said the brief. Petrobangla emphasised fixing the maritime boundary. Priority should be given to supplying gas to fertiliser factories, cottage industries and foreign currency-earning industries than supplying to consumers who can use alternative energy resources, it said. As this sector is capital dependent, Petrobangla urged the prime minister fix gas prices commercially. Coal exploration and development activities should be geared up for growth of power sector, it stressed.

RESISTANCE & INSTITUTIONAL SHORTCOMINGS
While fund crisis and institutional shortcomings coupled with inaction of the past four-party alliance government had almost halted development of the energy sector, different groups had been resisting new energy exploration and development activities by foreign companies.

Following the Magurchhara blowout of 1997, Jamaat-e-Islami-leaning retired secretary Shah Abdul Hannan turned to the court in late nineties and during the four-party rule, the High Court imposed a stay order on bidding in on-shore blocks. Till now the government did not contest the court order while the stay order contributed to the existing problem, Petrobangla sources said.

Towards the fag end of the alliance rule, when Petrobangla tried to float an on-shore and off-shore block bidding by challenging the court order, the then legal adviser to Petrobangla, belonging to pro-Jamaat camp of lawyers, suggested limiting the bid to off-shore blocks. Accordingly, Petrobangla prepared for the off-shore bid that was floated in early 2008.

Again, following the Tengratila blowout in 2005, environment group Bangladesh Environment Lawyers Association (Bela) filed a lawsuit against the gas field’s operator Canadian company Niko, which led to suspension of payment to Niko and its Bangladeshi partner Bapex. The case is now in its final stage of disposal.

On the other hand, the national committee for protecting oil, gas and coal resources launched a campaign against the proposed open-pit mining in Phulbari by British company Asia Energy, which led to death of several protesters in police firing in 2006. The campaign gained ground as the-then government left the matter of resettlement and compensation to Asia Energy which is perceived as an “inexperienced” and “insensitive” company. Following the “success” in Phulbari, the committee has continued campaigning against any open-pit coal mining.

The campaign has also gained popularity among people around Barapukuria underground mine, who recently attempted to get the lone coal mine’s new production suspended. Due to the “nationalistic” peer pressure caused by such campaigns, the government has been unable to take any decision in the last two years concerning vital issues including the country’s first coal policy.

Meanwhile, the lone Barapukuria coal mine is producing nearly 9,00,000 tonnes of coal a year, and a few other coal zones now await government decision. The country is officially and unofficially importing more than 3 million tonnes of low quality and environmentally hazardous coal from India worth around Tk 2,500 crore a year.